| OPERATING AND REPORTING SEGMENTS |
OPERATING AND REPORTING SEGMENTS
We operate with two principal business segments: homebuilding and financial services. As defined in ASC 280-10, Segment Reporting, we have nine homebuilding operating segments. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. We aggregate our homebuilding operating segments into reporting segments based on similar long-term economic characteristics and geographical proximity. Our current reportable homebuilding segments are as follows:
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West: |
Arizona, California and Colorado |
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Central: |
Texas |
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East: |
Florida, Georgia, North Carolina, South Carolina and Tennessee |
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Management’s evaluation of segment performance is based on segment operating income, which we define as homebuilding and land revenues less cost of home construction, commissions and other sales costs, land development and other land sales costs and other costs incurred by or allocated to each segment, including impairments. Each reportable segment follows the same accounting policies described in Note 1, “Organization and Basis of Presentation.” Operating results for each segment may not be indicative of the results for such segment had it been an independent, stand-alone entity for the periods presented.
The following segment information is in thousands:
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2017 |
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2016 |
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2017 |
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2016 |
Homebuilding revenue (1):
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West |
$ |
373,708 |
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$ |
330,805 |
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$ |
1,055,086 |
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$ |
924,494 |
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Central |
236,884 |
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200,446 |
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637,394 |
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571,036 |
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East |
195,005 |
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221,606 |
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587,867 |
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652,989 |
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Consolidated total |
$ |
805,597 |
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$ |
752,857 |
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$ |
2,280,347 |
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$ |
2,148,519 |
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Homebuilding segment operating income: |
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West |
$ |
35,026 |
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$ |
27,829 |
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$ |
94,169 |
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$ |
71,387 |
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Central |
26,404 |
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18,635 |
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63,524 |
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52,313 |
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East |
4,954 |
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9,737 |
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12,675 |
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27,918 |
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Total homebuilding segment operating income |
66,384 |
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56,201 |
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170,368 |
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151,618 |
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Financial services segment profit |
5,514 |
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5,956 |
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15,361 |
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15,765 |
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Corporate and unallocated costs (2)
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(9,264 |
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(10,063 |
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(24,809 |
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(24,652 |
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(Loss)/earnings from other unconsolidated entities, net |
(91 |
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440 |
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852 |
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856 |
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Interest expense |
(1,116 |
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(167 |
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(3,561 |
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(5,127 |
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Other income, net |
2,028 |
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1,435 |
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5,218 |
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3,263 |
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Net earnings before income taxes |
$ |
63,455 |
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$ |
53,802 |
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$ |
163,429 |
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$ |
141,723 |
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(1) |
Homebuilding revenue includes the following land closing revenue, by segment, as outlined in the table below. |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2017 |
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2016 |
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2017 |
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2016 |
Land closing revenue: |
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West |
$ |
— |
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$ |
15,543 |
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$ |
11,800 |
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$ |
15,608 |
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Central |
125 |
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947 |
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247 |
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4,659 |
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East |
464 |
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497 |
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4,895 |
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920 |
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Total |
$ |
589 |
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$ |
16,987 |
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$ |
16,942 |
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$ |
21,187 |
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(2) |
Balance consists primarily of corporate costs and numerous shared service functions such as finance and treasury that are not allocated to the homebuilding or financial services reporting segments. |
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At September 30, 2017 |
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West |
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Central |
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East |
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Financial Services |
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Corporate and
Unallocated
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Total |
Deposits on real estate under option or contract |
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$ |
21,275 |
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$ |
23,237 |
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$ |
23,035 |
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$ |
— |
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$ |
— |
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$ |
67,547 |
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Real estate |
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1,183,953 |
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701,516 |
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876,800 |
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— |
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— |
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2,762,269 |
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Investments in unconsolidated entities |
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7,660 |
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7,158 |
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— |
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— |
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1,560 |
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16,378 |
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Other assets |
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47,648 |
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(1) |
104,063 |
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(2) |
117,411 |
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(3) |
615 |
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136,227 |
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(4) |
405,964 |
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Total assets |
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$ |
1,260,536 |
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$ |
835,974 |
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$ |
1,017,246 |
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$ |
615 |
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$ |
137,787 |
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$ |
3,252,158 |
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(1) |
Balance consists primarily of cash and property and equipment. |
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(2) |
Balance consists primarily of development reimbursements from local municipalities and cash. |
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(3) |
Balance consists primarily of real estate not owned and goodwill (see Note 9). |
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(4) |
Balance consists primarily of our deferred tax asset and cash.
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At December 31, 2016 |
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West |
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Central |
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East |
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Financial Services |
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Corporate and
Unallocated
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Total |
Deposits on real estate under option or contract |
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$ |
25,863 |
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$ |
27,669 |
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$ |
32,024 |
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$ |
— |
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$ |
— |
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$ |
85,556 |
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Real estate |
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1,120,038 |
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595,485 |
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706,540 |
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— |
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— |
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2,422,063 |
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Investments in unconsolidated entities |
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7,362 |
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7,450 |
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— |
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— |
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2,285 |
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17,097 |
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Other assets |
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45,624 |
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(1) |
94,299 |
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(2) |
93,245 |
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(3) |
812 |
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129,995 |
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(4) |
363,975 |
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Total assets |
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$ |
1,198,887 |
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$ |
724,903 |
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$ |
831,809 |
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$ |
812 |
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$ |
132,280 |
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$ |
2,888,691 |
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(1) |
Balance consists primarily of cash and property and equipment. |
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(2) |
Balance consists primarily of development reimbursements from local municipalities and cash. |
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(3) |
Balance consists primarily of goodwill (see Note 9), prepaid permits and fees to local municipalities and cash. |
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(4) |
Balance consists primarily of cash and our deferred tax asset. |
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